Lack of land strangling Las Vegas Valley real estate, builders say

About 25,000 acres in the Las Vegas Valley remain available for development, and the region could run out of buildable land in as little as seven years, one homebuilder said.

Nicole Bloom, division president for Richmond American, outlined the constraints hindering development in the valley on a panel made up of homebuilders Tuesday at Revel Vegas, an independent living community for seniors. The federal government controls almost all the land available for development in the valley, she said.

“I think what a lot of people don’t realize is the land values in our valley have escalated so exponentially fast,” she said. “And obviously builders are for-profit businesses.”

Homebuilders spoke of the multitude of factors weighing heavily on the local real estate market during Keller Williams’ Meet the Builders panel, including lack of land to develop, high land costs, record-setting residential real estate prices and high mortgage rates.

Lack of land top of mind

The Bureau of Land Management, which controls approximately 88 percent of the land in Clark County, is coming under increased pressure from the private sector and making its way to Gov. Joe Lombardo’s desk. In February, Lombardo pressured legislators to issue a resolution urging the Department of the Interior to release land for housing development in the state. However, leaders of the Democratic-majority Legislature have plans of their own to address housing.

Bloom said she thinks the land issue is top of mind for Lombardo right now, given the valley’s high real estate prices, which are hitting affordable housing particularly hard. Nevada is short at least 78,000 affordable housing units, according to estimates, a number that has been steadily climbing over the past few years.

“We have a pretty big crisis here,” she said. “It’s very hard to develop right now with the limited availability of land.”

Where mortgage rates will land

All three of the homebuilding companies represented at the panel — KB Home, Richmond American and Tri Pointe Homes — spoke of their financing arms, which are allowing homebuyers to buy down their mortgage rates.

The average rate for a 30-year, fixed-rate mortgage was 6.6 percent as of Thursday, according to mortgage buyer Freddie Mac. That figure has not been below 6 percent since September 2022.

John McLaury, senior vice president of sales for KB Home, who is based in the valley and focuses on the starter home market, said homebuilders had to start pivoting when mortgage rates shot up in 2022, and it’s anyone’s guess as to when they might drop again.

“I think our crystal balls broke years ago,” he said. “The good news is rates are trending down. I don’t think we’re ever going to see the days of 3 percent. Those days are gone, but we are able to get people down into the fives with our financing.”

All three homebuilders said most of the products they have that are lower than the valley’s record-high median sale price of $485,000 are attached, such as townhomes and duplexes. They said first-time buyers looking to get into the market right now need to readjust their expectations as to what is available and affordable. The resale market has ground to a halt because so many homeowners are locked into ultra-low rates secured during the pandemic and are unwilling to put their homes on the market and lose those rates.

Builders say politics are also weighing heavily on market sentiment right now, and so is the Trump administration’s whipsaw stance on tariffs against Canada, Mexico and China. Bloom explained that the U.S. gets the majority of its lumber — a key element in homebuilding — from Canada, and still imports a lot of its base materials for all kinds of building.

Geoff Gorman, vice president of sales for Tri Pointe, said it’s tough to keep up with the news right now, given how policies seem to change on a moment’s notice.

“I don’t know what to think anymore,” he said as to where the Trump administration will ultimately land on the issue of tariffs, “and not to make a political statement, but the story seems to change every day and I just think prices are going to continue to go up.”

Contact Patrick Blennerhassett at pblennerhassett@reviewjournal.com.